By: Craig M. Nisnewitz, Esq.">
Late claim application denied based on collateral estoppel and proposed claim of questionable merit.
|Claimant(s):||ADAM DEVELOPERS ENTERPRISES, INC.|
|Claimant short name:||ADAM DEVELOPERS|
|Footnote (claimant name) :|
|Defendant(s):||THE STATE OF NEW YORK|
|Footnote (defendant name) :|
|Claimant's attorney:||HOLLANDER LAW GROUP, PLLC(1)
By: Craig M. Nisnewitz, Esq.
|Defendant's attorney:||HON. BARBARA D. UNDERWOOD
Attorney General for the State of New York
By: Michael I. Getz, Assistant Attorney General
|Third-party defendant's attorney:|
|Signature date:||August 15, 2018|
|See also (multicaptioned case)|
The following papers numbered 1-3 were read and considered by the Court on movant's late claim application:
Notice of Motion, Affidavit of Iqbal Ahmad, President of Adam Developers Enterprises, Inc. (ADE) and Exhibits, Memorandum of Law...................................1
Opposing Affidavit of Stephen McCorkell, the Capital Facilities Manager for the New York State Office of Parks, Recreation and Historic Preservation for its New York City Region (Parks), Opposing Affidavit of Christopher Carter, Construction Manager at LiRo Program and the LiRo Group Construction Manager, PC, Opposing Affidavit of Michael I. Getz, Assistant Attorney General, Exhibits and Memorandum of Law.......................................................................................................................2
Reply Affirmation of Craig M. Nisnewitz, Attorney for ADE.................................3
Movant ADE brings this application pursuant to Court of Claims Act § 10 (6) for leave to serve and file a late claim. ADE's proposed claim alleges breach of contract and quantum meruit based upon ADE's allegation that Parks wrongfully terminated the contract between Parks and ADE by Park's letter dated August 23, 2016 (Movant's Ex. C). In addressing this late claim application, it is necessary to review the background of events that occurred in the United States Bankruptcy Court, Eastern District of New York, as Parks opposes ADE's late claim application and argues that ADE is collaterally estopped from seeking leave to bring a late claim in this Court based upon the same facts and issues which were decided against ADE by the Bankruptcy Court.
By letter dated May 29, 2015, Parks accepted ADE's contract bid for the reconstruction of the upper plaza at the Roberto Clemente State Park, along the Harlem River in the Bronx (Defendant's Ex. 1). On July 31, 2015, Ironshore Indemnity Inc. (the surety) executed a performance bond (Defendant's Ex. 2). On August 25, 2015, the New York State Comptroller approved the contract and it was assigned contract No. D004589. The contract price as bid by ADE was $6,241,370.00 and the completion date was no later than November 22, 2016, 455 days after contract approval (Defendant's Ex. 4).
By letter dated August 23, 2016 labeled "Declaration of Default," Parks gave notice of its intent to terminate the contract (Movant's Ex. C). Movant contends that the letter does not satisfy the termination provisions of the contract set forth in §§ 14.3 and 27.2 or Article 15 of the contract (Movant's Exs. D, F). Additionally, movant argues that the termination was not proper under § 3.1 of the performance bond (Movant's Ex. E).Bankruptcy Court Proceedings
On August 24, 2016, the day after Parks sent the Declaration of Default, ADE filed a voluntary petition for relief under chapter 11 of title 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of New York (Defendant's Ex. 18). On November 18, 2016, ADE filed a verified complaint against Parks in the Bankruptcy Court seeking, among other things, damages for breach of contract and quantum meruit (Defendant's Ex. 20).
On November 23, 2016, Parks filed a motion in Bankruptcy Court seeking a determination that the automatic stay under Bankruptcy Code § 362 (d) (1) was not applicable to the State contract because Parks had terminated the contract prior to ADE's commencement of the bankruptcy case (Defendant's Ex. 16). In its motion papers before the Bankruptcy Court, Parks argued that ADE commenced the bankruptcy case one day after Parks had terminated the contract by letter dated August 23, 2016, in an effort to retain the State contract as an asset of ADE's estate and to secure the benefit of the automatic stay. Parks argued that the Bankruptcy Court should reject ADE's disingenuous conduct and determine that the automatic stay does not apply to the State contract because Parks terminated the contract prior to ADE's commencement of the bankruptcy case. ADE opposed Park's motion in Bankruptcy Court and argued that ADE did not breach the State contract and that Parks never properly terminated the State contract (Defendant's Ex. 17).
By decision dated January 12, 2017, U.S. Bankruptcy Court Judge Carla E. Craig granted Park's motion as follows:
"1. The Motion is granted to the extent provided herein.
2. Parks terminated the State Contract by letter dated August 23, 2016, prior to the Debtor's [ADE's] commencement of its bankruptcy case by filing a chapter 11 petition on August 24, 2016 ("Petition Date").
3. The automatic stay provided in 11 U.S.C. § 362(a) does not apply to the State contract because it was terminated before the petition Date and is not property of the Debtor's [ADE's] estate."
(Defendant's Ex. 18). On February 8, 2017, Parks moved to dismiss ADE's adversary proceeding in Bankruptcy Court alleging, inter alia, breach of contract and quantum merit on the ground that the Bankruptcy Court did not have jurisdiction over the claim against Parks. By decision dated April 13, 2017, United States Bankruptcy Judge Carla E. Craig granted Parks motion to dismiss as follows:
"1. The Motion is granted to the extent provided herein.
2. The adversary proceeding is dismissed pursuant to Bankruptcy Rule 7012 and Fed. R. Civ. P. Rule 12(b)(1), because the Eleventh Amendment to the United States Constitution bars the plaintiff's [ADE's] suit in the United States District Court or a unit thereof, against Parks, a New York State agency."
(Defendant's Ex. 20).Late Claim Application
The determination of a motion for leave to file a late claim requires the Court to consider, among other relevant factors, the six factors set forth in subdivision 6 of section 10 of the Court of Claims Act: (1) whether the delay in filing the claim was excusable; (2) whether Parks had notice of the essential facts constituting the claim; (3) whether Parks had an opportunity to investigate the circumstances underlying the claim; (4) whether the claim appears to be meritorious; (5) whether the failure to file or serve a timely claim or serve a timely notice of intention resulted in substantial prejudice to Parks; and (6) whether ADE has another available remedy. The presence or absence of any one factor is not determinative and the list of factors is not exhaustive (see Bay Terrace Coop. Section IV v New York State Employees' Retirement Sys. Policemen's & Firemen's Retirement Sys., 55 NY2d 979 ).
The Court has considered all the relevant factors and notes that while no single factor is determinative, it would be futile to grant a late claim application where the proposed claim is of questionable merit or would be subject to dismissal (see Barnes v State of New York, 158 AD3d 961 [3d Dept 2018]; Savino v State of New York, 199 AD2d 254 [2d Dept 1993]). Unlike a party who has timely filed a claim, a party seeking to file a late claim has the heavier burden of demonstrating that the claim appears to be meritorious (see Nyberg v State of New York, 154 Misc 2d 199 [Ct Cl 1992]; Matter of Santana v New York State Thruway Auth., 92 Misc 2d 1 [Ct Cl 1977]).
ADE brings this application for leave to serve and file a late claim alleging that Parks breached the contract between Parks and ADE by its ineffective termination letter of August 23, 2016 and that therefore ADE is entitled to recovery on a theory of breach of contract or quantum meruit (Movant's Ex. A). Parks opposes ADE's late claim application by invoking the doctrine of collateral estoppel regarding the issues decided against ADE in Bankruptcy Court. Specifically, Parks argues that ADE cannot bring a claim in the Court of Claims based upon the allegation that Parks breached the State contract by its August 23, 2016 letter because the issues of whether ADE breached the State contract and whether Parks terminated the State contract were fully argued and determined by the Bankruptcy Court.
"Collateral estoppel precludes a party from relitigating in a subsequent action or proceeding an issue raised in a prior action or proceeding and decided against that party or those in privity" (Buechel v Bain, 97 NY2d 295, 303 ). "The doctrine of collateral estoppel is based on the notion that it is not fair to permit a party to relitigate an issue which has previously been decided against him in a proceeding in which he had a fair opportunity to fully litigate the point" (Gilberg v Barbieri, 53 NY2d 285, 291 ). Two requirements must be met before the doctrine of collateral estoppel can be invoked. First, there must be an identity of issue which has necessarily been decided in the prior action and is decisive of the present action. Second, there must have been a full and fair opportunity to contest the decision now said to be controlling (Buechel, 97 NY2d at 303-304). Parks has met both requirements and ADE has not effectively opposed the application of the doctrine by demonstrating the absence of a full and fair opportunity to contest the issues decided against ADE in Bankruptcy Court (Buechel, 97 NY2d at 304).
The Bankruptcy Court decided that "Parks terminated the State Contract by letter dated August 23, 2016" (Defendant's Ex. 18). The Bankruptcy Court's determination collaterally estops ADE from relitigating in this Court the issues decided against ADE in Bankruptcy Court (see Ryan v New York Tel. Co., 62 NY2d 494 ; Collins v Indart-Etienne, 59 Misc 3d 1026 [Sup Ct, Kings County 2018, Levine, J.]). Thus, it would be futile to grant ADE's late claim application regarding the allegation of breach of contract based upon facts and issues previously litigated in the Bankruptcy Court because such a claim would be subject to dismissal (see Barnes, 158 AD3d 961; Savino, 199 AD2d 254). Additionally, there is no legal basis for ADE's proposed claim alleging quantum meruit because a written contract exists and it would be futile to grant a late claim application where the proposed claim is of questionable merit or would be subject to dismissal (see IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 142 ; Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 387-389 ; Barnes, 158 AD3d 961; Savino, 199 AD2d 254).Accordingly, ADE's late claim application is DENIED.
August 15, 2018
White Plains, New York
Judge of the Court of Claims
1. Hollander Law Group, PLLC replaced Moritt Hock & Hamroff, LLP as the attorney of record.